Can a Person Keep a Car in a Chapter 7 Bankruptcy?

The general answer is yes, provided a number of factors exist. First, the person must be current on his monthly payments. If not, the auto finance company will likely choose to repossess the auto rather than offer a reaffirmation agreement. Second, the person must not have significant equity in the vehicle. If so, the trustee may be able to sell the vehicle right out from under the individual and tender a check for $2,400.00 in exchange for the vehicle. Lastly, if a reaffirmation agreement is entered into, the court can knock out the agreement if it finds that there is a presumption of undue hardship which the debtor has not adequately rebutted.

Although the above is a general overview of keeping a vehicle in a Chapter 7 case, each case is different. In some cases, there are exemption issues, equity issues, payment issues. Please consult with an experience bankruptcy attorney before you go down the bankruptcy road. The laws, cases, facts and scenarios are becoming more and more complex. However, with good counsel at your side, Chapter 7 bankruptcy can be a very healing chapter under the U.S. Bankruptcy Code.